Top 5 Momentum Indicators I Use for Midcap Trading

By TradeCraft | May 6, 2025

Introduction

Momentum trading is about catching stocks as they begin to move, not after the move is over. In this article, I’ll share the five momentum indicators that have consistently helped me spot high-potential midcap stocks before they break out. These tools are inspired by the approaches of Mark Minervini and Dan Zanger, but adapted for today’s markets.

1. Relative Strength (RS) Rating

The RS Rating compares a stock’s price performance to the overall market. I look for stocks with RS Ratings in the top 10% of the market. This is often a precursor to institutional buying.

2. Moving Average Convergence Divergence (MACD)

MACD helps me spot momentum shifts. I look for bullish crossovers and positive histogram bars, especially when the stock is emerging from a base.

3. Relative Volume (RVOL)

RVOL measures current volume versus average volume. A spike in RVOL (2x or more) often precedes a breakout. I use RVOL to confirm that a move is supported by real buying interest.

4. Rate of Change (ROC)

ROC measures the speed of a stock’s price movement. I use it to filter for stocks with accelerating momentum, but avoid those that are overextended.

5. Stochastic RSI

Stochastic RSI is a momentum oscillator that helps me time entries. I look for crossovers above 20 (bullish) or below 80 (bearish) to spot early reversals or confirm trends.

Putting It All Together

No single indicator is perfect. I use a combination of these tools to build conviction. For example, a midcap stock with a high RS Rating, bullish MACD, and RVOL spike is a prime candidate for my watchlist. Always confirm with price action and volume before entering.

Conclusion

Momentum trading is about stacking probabilities. By mastering these indicators and combining them with sound risk management, you can consistently find and ride the next wave of midcap leaders. For more indicator breakdowns and live trade setups, explore the rest of the TradeCraft blog.